AGC Group: Advancing Toward Vision 2025
(7 pages of text)
In early 2019, Asahi Glass Co., Ltd. (AGC), a diversified Japanese company, was at a critical juncture in its evolution. Three years earlier, AGC had released its Vision 2025, which set a goal for the company to continue as a leading global provider of materials and solutions that improved the daily lives of people around the world. Its financial performance had improved significantly over the previous five years, but profitability remained modest, with operating profit margins slightly above 8 per cent. The modest profitability of the company belied a strong base of technologies in glass, chemicals, electronics, and ceramics. AGC could potentially use these strengths to develop and market high value-added products in varied sectors such as mobility, construction, new energy, and life sciences. To effectively exploit future opportunities, however, the company needed to devise and implement novel strategies, overcome competitive challenges, and align its internal organization. Specifically, it would need to extend or modify its globalization strategy by developing a differentiated strategy for combinations of products and countries, develop new competencies in areas such as biologics, and choose the appropriate entry modes to balance financial and strategic implications. How should AGC proceed toward achieving its Vision 2025 goals?
This case can be used in both undergraduate- and graduate-level courses on strategic management and international business. The case illustrate issues relating to two broad strategies: product and geographic diversification. Students should have a basic understanding of key issues such as international trade (specifically, how it influences a firm's strategy, including plant location), cultural proximity and its implications for internationalization, and vertical integration. The case encourages discussion about how a traditional company can start its adaptation journey for a challenging, yet potentially rewarding, new world. After working through the case and assignment questions, students will be able to
- understand how international trade influences a firm's strategy, including its plant locations;
- discuss cultural proximity and its implications for internationalization;
- understand the exploitation of adjacencies and of vertical integration;
- examine the performance of a company's diversification strategy;
- discuss how a company can strategize to exploit significant opportunities in an evolving environment;
- understand the conflicting imperatives that diversified global corporations face; and
- discuss the need to develop multi-dimensional capabilities.
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